The world is not yet out from a Chinese made problem: Covid-19. And, another is already brewing in the country.
Chinese real estate company, Evergrande, is staring at bankruptcy, with more than USD 300 billion of debt and more than 800 stalled projects.
The countrywide protests at its offices are just an indication of the tip of the problem. The rot runs much deeper.
More than a million Chinese home buyers are staring at the complete washout of their hard-earned money. Because Evergrande is in no position to either complete the projects or return the money to buyers.
Akin to the Chinese model of growth, Evergrande’s success was built on heavily borrowed money. With its businesses not generating revenue, it’s in no position to deliver on its promises.
In 2008, Lehman Brothers had a liability of USD 620 billion. The collapse of the American investment bank sent ripples across the globe. And the world was yet to recover fully from that shock when the Covid-19 struck in January last year.
Amid the crisis, it is not yet clear what the Chinese government’s response under President Xi Jinping would do. Whether it would allow a massive restructuring or a bankruptcy filing.
In early 2020, the Communist government of China ahs allowed more than 2,00,000 companies to file for bankruptcy.
The massive government crackdown on the Chinese internet companies wiped off billions of dollars from the Chinese market.
“According to Bloomberg, Colin Huang, the founder of Chinese e-commerce platform Pinduoduo Inc (PDD), has the unpleasant distinction of being the man who has lost the most money this year.” He lost more than USD 27 billion.
Huang is not an exception but a name in a growing tribe. Zhong Shanshan, the chairman of bottled water company Nongfu Spring Co, has lost more than USD18 billion, as has Hui Ka Yan, the embattled developer of Evergrande, and Tencent's Pony Ma, who has lost more than USD10 billion.
And, any attempt at slightest criticism of the government authorities is dealt harshly.
The most famous face of the Chinese wealth, Alibaba founder Jack Ma, disappeared after he criticized the Chinese regulators.
Next year, the Chinese Communist Party will be meeting for its Congress to declare the new leaders of the Communist Party. It is widely expected that President Xi Jinping would be announced the president for the unprecedented third time.
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External Affairs Minister (EAM) S Jaishankar on Monday said that he had "very productive talks" with Israel's Foreign Minister Yair Lapid, where they discussed a wide range of regional and global issues, including the in-principle agreement on mutual recognition of Covid vaccination certification. During the meeting, the two ministers agreed to resume FTA (Free Trade Agreements) negotiations next month. "Very productive talks today with APM and FM @YairLapid ...